Press Release
December 26, 2006


Senate Minority Leader Aquilino Q. Pimentel, Jr. (PDP-Laban) today assailed the succession of increases in water fees being charged against Metro Manila consumers which defeats the purpose of the privatization of water distribution, which is to keep water rates affordable.

Pimentel said he saw no reason to justify the hike in water rates of Maynilad Water Services Inc. (MWSI) by 48 centavos per cubic meter for the West Zone and that of the Manila Water Company, Inc. (MWCI) by 84 centavos per cubic meter for the East Zone.

?This is a sad development. My understanding was that the water services in Metro Manila were privatized to bring down, not hike, water rates,? he said.

The requests to raise water rates were granted by the Metropolitan Waterworks and Sewerage System (MWSS) Regulatory Office effective Jan. 1, 2007 despite the fact that new investors have taken over the Maynilad while Manila Water is operating profitably.

As approved by the MWSS Regulatory Office, consumers in the West Zone will pay an average of P32.99 per cubic meter from P32.51 to Maynilad.

On the other hand, consumers in the East Zone will pay an average of 20.68 per cubic meter, from the previous P19.84.

Pimentel noted that before the latest increase, Maynilad had raised its water rates four times, bringing the cost of water from P4.96 per cubic meter in 1997 to P32.93 equivalent to a 563 percent hike.

Manila Water had jacked up its rate 12 times bringing water cost from P2.32 per cubic meter in 1997 to P19.73 representing a 750 percent increase.

Pimentel said the promises of the two private concessionaires to improve water services at affordable cost turned out to be just a scheme to enable them to capture the lucrative water distribution business in Metro Manila.

?I guess this is what is meant by market forces dominating even the social services that government owes to the people,? he said. ?And if Manila Water in particular has been operating profitably, why the increase in water rate??

The opposition senator said this is the worst Christmas gift that Maynilad and Manila Water could give to Metro Manilans especially at a time when a huge number of households are complaining of lack of water or poor water flow from their faucets due to leakages, and inefficient maintenance, aggravated by the El Nio phenomenon.

?It?s bad omen for the wage earner of what to expect for the New Year.

Pimentel said the ordinary consumers find the additional water fees difficult to understand considering that Maynilad Water has just been resold to the DMCI Holdings and First Metro Pacific Holdings for $477 million, which can be used partly to upgrade facilities and expand operations to benefit more waterless areas.

He said the increase in water rates looks more unconscionable in the light of the following privileges enjoyed by Maynilad and Manila Water:

1. Passing on their corporate income taxes to consumers. This means that Maynilad and Manila Water are charging their customers an additional P4.15, and P1.55, respectively, per cubic meter of water, according to the Freedom from Debt Coalition.

2. The two private concessionaires have been granted exemption from the 12 percent limitation on profit margin of public utilities. Manila Water, in particular reportedly registered a 40.92 percent return on rate base in 1999, enabling it to pocket P281 million excess profit.

These privileges are embodied in the MWSS board resolution No. 2004-201 and Regulatory Office Resolution No. 04-006 declaring the concessionaires as mere agents and contractors, and not as public utilities.

Given the circumstances behind the approval of the water rate increase, Pimentel said this was apparently intended to fatten the profits of the private corporations managing the water distribution in the metropolis at the expense of the hapless consumers.

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